Drilling market spurs oilfield service fims
New York, April 20, 2013
Signs of improvement in the depressed North American drilling market and steady growth elsewhere helped oilfield services companies Schlumberger and Baker Hughes beat Wall Street's profit expectations.
Sector leader Schlumberger posted earnings above analysts' estimates for the sixth straight quarter, lifted by strong and consistent growth in countries including Saudi Arabia, Iraq, China and Australia.
Third-ranked Baker Hughes' profit also topped estimates, and the company forecast a modest increase in US rig counts for 2013.
As the US starts to clear a natural gas glut created by the hydraulic fracturing revolution, prices for the fuel have improved, reducing the drag on drilling activity there.
Schlumberger's first-quarter net income fell three per cent to $1.26 billion, or 94 cents per share. Excluding items, it was $1.01 per share, while revenue rose to $10.67bn. Analysts had expected earnings of 99 cents per share on revenue of $10.7 billion.
As for Baker Hughes, its first-quarter net income fell to $267 million, or 60 cents per share, from $379m, or 86 cents per share. Excluding a $23 million loss from Venezuelan currency devaluation, the company earned 65 cents per share, above Wall Street expectations of 62 cents. Revenue fell 2 per cent to $5.23 billion, beating analysts' estimates of $5.18 billion.
Halliburton, the US market leader and the largest fracking company, is due to report earnings on Monday.
"North America took a step in the right direction," Baker Hughes chief executive Martin Craighead told analysts on a conference call yesterday.
While overall earnings were down 30 per cent from a year earlier, the company said increased drilling in Canada and a strong pumping business lifted its first-quarter profit in North America from the previous quarter.
UBS analyst Angie Sedita said Baker had a solid quarter in the Middle East as well as North America, two areas of relative weakness in the past.
Looking at signs that US land drilling was improving, Barclays analysts said the number of permits issued in the country rose by 8 per cent in March from February.
Schlumberger, which said last month that North American activity was weaker than expected, said it was still uncertain about the region. Low natural gas prices had made drilling for gas uneconomical in many fields and weighed down the prices charged for services like pressure pumping.-Reuters